The housing market is showing no sign of slowing down with prices rising by 2.1 per cent in September, says Nationwide.

The building society said there was "no compelling evidence" the boom was over and increased its forecast for annual house price inflation for 2002 to 23 per cent from its previous prediction of 18 per cent.

September's jump - which is slightly lower than July and August's increase of 2.5 per cent and June's surge of 3.3 per cent - lifts the average price of a house to £112,919, although house price growth for the past 12 months eased slightly to 22.2 per cent compared with 22.7 per cent in August.

in September, the average UK property still increased in value by just over two cent.

"There remains no compelling evidence of the market slowing significantly.

"Prices rose by seven per cent in July to September, representing the second highest, after April to July's 7.5 per cent, quarterly increase since 1989."

Today's figures come after statistics from the Bank of England and the British Bankers' Association suggested the market was showing signs of slowing down, with both groups recording a fall in total mortgage lending and new mortgage approvals during August.

However, Nationwide said that although the current pace of growth was unsustainable over the

medium term, the market was not teetering on the brink of a sharp slowdown.

The building society said people could cope with the increased level of debt as the low inflation and low interest rate environment persisted.

It added that there were currently around 300,000 fewer first-time buyers than at the end of the 1980s boom.

Less than eight per cent of these were borrowing without a deposit compared with more than 30 per cent in 1989.

Nationwide said during the 1980s first-time buyers struggled most with higher interest rates and negative equity but since they were now fewer and less overstretched it was likely the market was in a more sustainable state than in the run-up to the 1990s crash.

But the building society added that affordability was becoming stretched in some parts of the